Brent oil edged toward the highest intraday level since 2014 as the market tightened and concerns about the impact of omicron eased.

Futures in London, which capped a fourth weekly gain Friday, jumped in early Asian trading to near a seven-year high before paring gains on signs of slowing Chinese economic growth. High prices are justified and futures could rise even further, according to trader Vitol Group. Oil’s market structure has firmed in a bullish backwardation pattern, indicating growing supply tightness.

Oil has rallied more than 10% so far this year, in part due to outages in OPEC+ producers including Libya. The International Energy Agency said last week that global demand has turned out to be stronger than expected, while the physical market is booming as buyers look beyond the spread of omicron.

“The oil complex has put the latest Covid wave firmly behind it,” said Vandana Hari, founder of Vanda Insights in Singapore. “Growing OPEC+ shortfalls against target output and festering geopolitical threats to supply are supporting bullish sentiment.”

Prices

Brent for March settlement rose 0.6% to $86.56 a barrel on the ICE Futures Europe exchange at 7:30 a.m. in London after climbing 1.9% on Friday. Futures rallied to $86.71 earlier, 4 cents shy of the highest level since October 2014. The prompt timespread for Brent was 74 cents in backwardation, compared with 57 cents a week earlier. West Texas Intermediate for February delivery gained 0.8% to $84.49 on the New York Mercantile Exchange.

The Covid-Zero policy employed by China will probably ensure that there’s no omicron outbreak big enough to significantly diminish the use of oil products there, Mike Muller, Vitol’s head of Asia, said Sunday on a webinar hosted by Dubai-based consultancy Gulf Intelligence.

China’s central bank, meanwhile, cut its key interest rate for the first time in almost two years to help bolster an economy that’s lost momentum because of a property slump and repeated virus outbreaks. Official data Monday showed gross domestic product rose 4% last quarter from a year earlier, the weakest since early 2020.

Other market news:

China’s oil processing volumes rose more than 4% to a record last year as state-owned refiners boosted output and new integrated plants came online. India’s daily sales of gasoline and diesel during the first half of January each slumped about 14% from last month as a spike in coronavirus cases cut traffic movement. Sales of Iranian crude oil, gas condensates and petrochemical products have risen dramatically in the past 10 months, the country’s oil minister said.

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